Oct 26, 2022

VOT Research Desk

The third quarter Consumer Price Index for Australia has driven up the price of AUD crosses. A low of 1.1097 and a high of 1.1144 have been experienced by AUD/NZD, which is now trading at 1.1125.

The statistics increased speculation that the Reserve Bank of Australia would adopt a more aggressive stance when it meets next week, which led to a rise in the Australian dollar.

Cash rates are anticipated to peak at roughly 4.3%, and the financial markets have all but priced in another quarter-point increase from the Reserve Bank of Australia in November.

As the dollar drops back below 111, a level not seen in nearly three weeks, the Australian and New Zealand currencies are rebounding from worries over China’s prospects under new party leaders and the terrible statistics published.

High beta currencies like the Australian and New Zealand dollars saw an increase in demand due to speculation that the Federal Reserve might decrease the rate of interest rate increases later this year.

The dollar’s weakness was evident across the board, with selling activity against the British pound being some of the most obvious as investors hailed Rishi Sunak as the next UK prime minister.

Price will continue to rise as long as the pair remains above the trendline, with targets of 1.1180 coming after.

Oct 25, 2022

VOT Research Desk

In the Tokyo session, the AUD/NZD pair is failing to overcome the 1.1100 immediate barriers as investors await the publication of the Australian inflation data. Broadly speaking, the asset is fluctuating between 1.1073 and 1.1100 following a powerful bounce. Out of the two antipodeans, it appears that an unprecedented third term in office for China’s XI Jinping backed the aussie bulls.

The occurrence has raised the possibility of a further downturn in the Chinese economy as President Jinping of China may continue the Covid-19 policy of zero tolerance. The publication of the Australian Consumer Price Index (CPI) this week will be closely followed for clues regarding the Reserve Bank of Australia’s (RBA) expected monetary policy action, which will take place next week.

According to the forecasts, yearly headline inflation will increase to 7.0% from the previous release’s 6.1%. The plain-vanilla CPI might fall to 1.5% on a quarterly basis from its previous reading of 1.8%.

It is important to note that Australia’s employment numbers, which were reported last week, were really low, and that the RBA Governor Philip Lowe may now face further challenges due to the increased consensus for inflationary pressures.

In New Zealand, Chief Economist of the Reserve Bank of New Zealand (RBNZ), Paul Conway, expressed optimism that inflationary pressures have reached their peak.

He thinks there is proof of a slowdown in pricing pressures accessible. The drop in housing values might hold down consumer spending. He continued by saying that China is no longer a deflationary power.